In 2003, the City of Pittsburgh was designated a financially distressed city pursuant to the Municipalities Financial Recovery Act (Act 47), and entered Act 47 oversight. As part of the Act 47 process, the City has implemented a Second Amended Recovery Plan in 2014 (2014 Plan), which addresses the compensation of the City’s employees, including its police officers. The City and the Fraternal Order of Police Fort Pitt Lodge No. 1 (FOP), which represents the City’s police officers, are parties to a collective bargaining agreement (CBA) that expired at the end of 2014.

FOP and the City were unable to reach an agreement on a new CBA and entered interest arbitration under the Act Governing Collective Bargaining by Policemen or Firemen (Act 111), concluding with the arbitration board issuing an award. Specifically, the Award addresses “wage adjustments” for full-time officers and adopts the schedule providing for azero increase in 2015, a one-percent increase in 2016, and two-percent increases in 2017 and 2018, as set forth in the 2014 Plan. Other than this change to the wage increase schedule, the Award did not alter the salary structure that had existed in the prior CBA.

FOP filed an appeal directly to Commonwealth Court, arguing that the award deviates from the 2014 Plan because it does not provide for the competitive compensation required by the 2014 Plan. Therefore, FOP argued, pursuant to Section 252(e) of Act 47, the Commonwealth Court could review the Award to determine if the Board’s deviation is in accordance with Section 252(b) of Act 47.

The City filed a Motion to Quash FOP’s Petition for Review arguing that the Commonwealth Court did not have jurisdiction to consider the appeal. Specifically, the City argued that because the Award was consistent with the 2014 Plan, FOP’s appeal essentially sought to challenge the 2014 Plan and the Commonwealth Court did not have jurisdiction over such a challenge.

The legislature previously revised Section 252 of Act 47 to allow for an Act 111 arbitration board to deviate from an Act 47 plan under certain circumstances and provided for a direct appeal to the Commonwealth Court of an award doing so. Therefore, for the Commonwealth Court to determine if it had jurisdiction, it needed to consider whether the Act 111 award deviates from the 2014 Plan.

FOP’s argument was based on the 2014 Plan’s provision: “Target outcome: Maintaining budget stability and competitive compensation.” Slip Op., at 8. However, based on its review of the entire provision, the court concluded that the purpose of the provision was:

…to set “the maximum dollars available for each bargaining unit . . . in each year, inclusive of increases and improvements to all components of employee compensation other than pensions and retiree health.” Other than this statement, the provision does not further discuss the maintenance of competitive compensation or otherwise require, as FOP argues, the City to increase compensation to ensure such competition. Thus, there was no “competitive compensation” requirement mandating an increase in compensation from which the Board turned aside, diverged, or strayed in issuing the Award.

Slip Op., at 9.

The court found further that FOP’s challenge of the workforce allocations in the 2014 Plan as arbitrary, capricious or established in bad faith was not a claim that the award deviated from the 2014 Plan.

Finding no deviation between the award and the 2014 plan, the court concluded FOP’s challenge did not fall into the narrow category of appeals authorized by Section 252(e) and was therefore subject to the normal appeals process to common pleas court.

Former Judge Cosgrove dissented, opining that the Majority’ interpreted the permission to deviate “so narrowly as to strangle it of meaning.” Slip Op., at JMC-2. He emphasized that the Plan “specifically made ‘[m]aintaining … competitive compensation’ an issue in determining the compensation to be paid to police officers in the City of Pittsburgh” contrary to the Majority’s finding that the 2014 Plan did not include a competitive compensation requirement. Admonishing the Majority for its narrow interpretation of Section 252’s deviation requirement, Judge Cosgrove concluded:

In taking the steps it did with Section 252, the General Assembly recognized the importance of allowing direct appeal to this Court in matters like this. Such an appeal helps to streamline a complicated process and allows for a swift resolution which would otherwise be denied by further litigation at a lower level. The Majority strains its judicial muscle in this case to find otherwise, and in so doing, renders the corrective measures of the Legislature nearly meaningless.

Slip Op., at JMC-3.

The Supreme Court granted allocatur to determine:

(1) Did the Commonwealth Court err when it erroneously concluded that the Act 111 Award did not deviate from the Act 47 Plan when the plan required a compensation package that was sufficiently competitive with those available to police officers in comparable political subdivisions, but the award failed to prove one?

(2) Did the Commonwealth Court err when it erroneously concluded that the Act 111 Award did not deviate from the Act 47 Plan, and therefore never addressed the award’s failure to determine if it (1) does not exceed the limits on expenditures set for the FOP Contract by the Act 47 Plan, (2) does not jeopardize the financial stability of the city, and (3) is consistent with the policy objectives set forth in Act 47 to relieve the financial distress of the city[?]

(3) Did the Commonwealth Court err when it erroneously concluded that the Act 111 Award did not violate Section 252 of Act 47 despite the fact that the expenditure limits in the Act 47 Plan were arbitrary, capricious, and established in bad faith?

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